OPM plans CFC overhaul as pledges plummet

Jan. 20, 2013 - 03:51PM
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The Combined Federal Campaign’s 2012 fundraising drive is likely to be its worst in at least six years.

More than two weeks after the pledge season officially closed, most major campaigns are reporting that they missed their fundraising goals — some significantly. And since many campaigns already lowered their expectations for the first time ever in 2012, the results are even more dismal, with 2012 looking to be the third straight year of declining contributions.

“We got our rear ends handed to us on a platter,” said Mary Ann Sallas, director of the New York City CFC. “Right now the numbers would make me cry.”

The CFC hit an all-time high of $282.6 million in pledges in 2009, before falling to $281.5 million in 2010 and $272.7 million in 2011. That was the lowest total since 2006, when federal employees donated $271.6 million through the CFC. Ten of the CFC’s largest campaigns had raised $111.6 million — about 95 percent of the $117 million they had hoped to raise in 2012. Campaigns said they are still collecting some stray pledges, but said the untallied funds are not likely to greatly increase their fundraising totals.

Campaign directors interviewed by Federal Times put most of the blame on the tumultuous environment faced by federal employees. The 2012 campaign season — which ran from Sept. 1 to Dec. 31 — fell in the thick of the government’s bitter year-end fight over the fiscal cliff. Several CFC officials said they think some potential donors were afraid sequestration would mean widespread and lengthy furloughs, so they reduced or cut out their donations.

The ongoing pay freeze also hurt efforts to raise money, they said. And some CFCs — especially New York City’s campaign — said fallout from Superstorm Sandy threw a wrench in their fundraising efforts.

This year’s abysmal results are likely to increase pressure on the federal government to reform CFC. The Office of Personnel Management is finalizing a package of far-reaching proposals it hopes will transform the CFC into a more efficient and effective charity drive.

OPM’s plan, outlined in a 53-page draft package of rules obtained by Federal Times, would abolish the existing system of 184 local federal coordinating committees that oversee the individual campaigns in favor of a smaller, unspecified number of regional organizations more closely controlled by OPM. Similarly, the 184 principal combined fund organizations that provide fundraising and management services to each campaign would be replaced by one or more central campaign administrators.

While OPM did not offer specific examples of how this approach would work in practice, it could mean that campaigns now based in Montgomery, Ala., and Chattanooga, Tenn., would in the future be run out of Atlanta. Local United Way organizations, which frequently serve as the PCFOs under contract, could lose much of that business.

Despite OPM’s past efforts to press smaller, more inefficient campaigns to merge, some individual CFCs have in recent years carried overhead rates that approach 50 percent as a proportion of pledges.

“We believe that a centralized approach will benefit from economies of scale and ultimately reduce overhead costs,” OPM Director John Berry wrote in the draft package.

Some of the plan’s specific proposals follow recommendations made last year by the CFC-50 Commission, an advisory panel Berry assembled to examine the campaign’s operations 50 years after its creation. Overall, Berry said, OPM believes the proposed changes will “improve the CFC, based on its experience administering the program and its considered judgment.”

Instead of donors indirectly paying for most campaign overhead costs with money taken from their pledges, each of the thousands of CFC charities would have to pay an unspecified upfront, nonrefundable application fee to participate in the CFC each year. They currently pay no application fee.

Other recommendations:

 The traditional 3½-month fundraising campaign would begin in October, instead of Sept. 1, to allow employees on leave during the December holiday season to pledge when they get back, Berry wrote.

 New federal employees could make pledges a month after they join the government. Currently, new hires must wait until the next campaign season to contribute.

 Create a permanent program to allow federal employees to respond quickly to relief efforts for individual disasters.

The proposed overhaul is under review by the Office of Management and Budget, which must sign off before the package can be published in the Federal Register for public comment. OPM has not made the plan public; Federal Times obtained a copy independently. Jennifer Dorsey, an OPM spokeswoman, referred questions to OMB, which declined to comment or say when its review might be completed.

OMB received the draft rules late last month, according to an agency website. Its review could take several months and lead to changes in what OPM is proposing. After that, OPM could also revise the package in response to public feedback.

Struggle to meet goals

Although the amount of the average CFC pledge has steadily increased over the last two decades, the participation rate among the federal workforce dropped to about 24 percent for the 2011 campaign, according to the CFC-50 Commission’s report.

And the largest campaigns are struggling to meet their goals.

The Greater SoCal CFC, which includes Los Angeles, raised almost $4.1 million as of last week — 18 percent below its $5 million goal. That tally is especially disappointing because this year, the smaller SoCal Tri-County campaign was merged with the former Greater Los Angeles CFC to form the Greater SoCal CFC. Demetrius Stevenson, director of the Greater SoCal CFC, said the two CFCs had a combined base of $4.9 million last year.

Even Superstorm Sandy affected his campaign, Stevenson said. OPM in November authorized a special one-time charity drive — outside the CFC — to help victims of the storm. That two-week pledge drive happened in the middle of the CFC season, and Stevenson said it took many people’s focus off of CFC.

Sandy directly devastated the New York City CFC and essentially cost the drive the entire month of November, Sallas said.

“Every office was closed for a week — some, two weeks,” Sallas said. “Some didn’t open for three weeks. Then we had Thanksgiving. Then we had 100 post offices in Queens shut, the postal people in that area lost everything — including their uniforms. It was just a difficult time.”

She would not tell Federal Times how much the New York City CFC has raised so far, but said she hopes that some pledges still being collected will get the New York CFC up to about 75 percent of its $2.3 million goal.

“It’s been a tough year,” Sallas said.

But CFC officials who spoke to Federal Times agreed that OPM’s decision to ban campaigns from spending donors’ contributions on food — made last spring in response to an inspector general report on wasteful spending at the Washington-area CFC — probably didn’t hurt their fundraising.

“I don’t feel donors in our area care whether you give them a donut or not,” said Karen Mitchell, chairwoman of the Dallas-Fort Worth CFC’s local federal coordinating committee. “It doesn’t have anything to do with whether you can offer refreshments [hampering fundraising]. It’s the loss of jobs, closure of facilities, the unknown of what will happen to us this year.”

The Hawaii CFC — the fourth-largest in the country — did not provide fundraising totals by press time. But Toni Allen, deputy chairwoman of the Hawaii local federal coordinating committee, said it was somewhere in the $5 million range. Hawaii raised $6.5 million in 2011.

“We dropped a lot,” Allen said. “We had a huge [number] of our baby boomers, the ones loyal to agencies and CFC, that [retired]. We’re trying to see where we’re lacking. We don’t know if it’s because younger feds are not giving or because we lost so many boomers this year.”

Mitchell said she is amazed at the generosity of younger workers, but because they earn smaller salaries than the older employees they replaced, they often cannot afford to donate as much to CFC.

Jean Brown, a member of the CFC-50 Commission and executive director of the Chicago Federal Executive Board, said she thinks younger federal employees may be sidestepping the CFC entirely and giving directly to charities. That way, more of their money can go to the causes they care about and not be peeled off by fundraising organizations.

Overhaul plan questioned

OPM appears to have followed the commission’s recommendations in a number of areas, such as the proposals to shift responsibility for campaign overhead from donors to charities, centralize fundraising and create a permanent disaster relief program. But OPM went considerably further in seeking to eliminate the local federal coordinating committees, which oversee individual campaigns. The commission proposed leaving the local committee structure intact, but urged that members get mandatory training in CFC policies and procedures.

OPM also did not adopt the commission’s recommendation to allow retired federal employees to participate.

The proposed changes drew mixed reactions from two commission members, Ken Berger, president and CEO of the watchdog group Charity Navigator, and Marshall Strauss, CEO of the Workplace Giving Alliance, a group of a dozen national and local CFC federations.

While the package represents “a good one-shot deal,” the CFC needs to be continually reviewing its operations and get feedback from donors, Berger said. Strauss voiced concern that a flat application fee could cause many charities to drop out of the campaign if set too high. Strauss also questioned whether a more centralized campaign could hurt federal employees’ willingness to pledge.

“Face-to-face participation is always the gold standard of raising money in the charity world,” Strauss said. If OPM’s plan reduces that participation, he said, “then the likely result will be a reduction in the amount of money raised.”